Afro Asia Shipping Co (Pte) Ltd v Haridass Ho & Partners and Another

• Jurisdiction: Singapore
• Judge: Lai Siu Chiu J
• Judgment Date: 10 February 2003
• Neutral Citation: [2003] SGHC 21
• Date: 10 February 2003
• Subject Matter: Whether plaintiffs' claim disclose no reasonable cause of action, frivolous or vexatious, or abuse of process,Civil Procedure,Consent order containing liberty to apply provision,Rules of Court (Cap 322, R 5, 1997 Rev Ed) O 18 r 19(1),Dispute over interpretation of consent order,Striking out,Plaintiffs initiating fresh action
• Docket Number: Suit No 807 of 2002
• Published date: 07 October 2003
• Defendant Counsel: Haridass Ajaib (Haridass Ho & Partners),Chan Kia Pheng (Khattar Wong & Partners)
• Court: High Court (Singapore)
• Plaintiff Counsel: Kenneth Tan SC (Kenneth Tan Partnership)

These proceedings were the subject of an appeal in Registrar's Appeal No. 216 of 2002 (the Appeal) and on my dismissal of the same, are now the subject of a notice of appeal filed in Civil Appeal No. 140 of 2002 by the plaintiffs.

The facts

1. Afro-Asia Shipping Company (Pte) Ltd (the plaintiffs) are a local company and are the owners of a building situated along Robinson Road called Afro-Asia Building (the Building). Haridass Ho & Partners (the first defendants) are a firm of Singapore solicitors who, at the material time, acted for members of the Bajumi family (the Bajumis), who are shareholders in the plaintiffs together with members of the Tan family (the Tans). The respective patriarchs (fathers) of the two (2) families had founded the plaintiffs back in 1961, as equal shareholders. UOB Kay Hian Pte Ltd (the second defendants) are a local securities company. The Bajumis sued the plaintiffs (and the Tans) in OS No. 727 of 1996 (the OS) and instituted proceedings against the same parties under s 216 of the Companies Act, in Companies Winding Up No. 162 of 1996, relating to assets owned by the plaintiffs; these assets included the Building, a rubber plantation in Indonesia and a block (17.4 million) of shares in a Singapore public company called Ssangyong Cement (Singapore) Limited. (Hereinafter the public company and the shares will be referred to as Ssangyong Cement and Ssangyong shares respectively). Both proceedings which were consolidated by Order of Court dated 16 September 1996 came on for hearing before Choo JC on 9 May 2001. By then, the two warring families had come to a settlement which essentially allowed the Bajumis to retain the Indonesian assets while the Tans would take over the Singapore assets. Choo JC's task was to determine the value of the assets (3) based on valuation reports tendered by the parties. The valuations he made resulted in appeals being filed in Civil Appeals No. 600066 and 600067 of 2001 respectively by the Bajumis and the Tans.

2. On 18 March 2002, the Court of Appeal made inter alia, the following consent orders (the First Order of Court):-

(1) the Judgement dated 9 May 2001 be reversed and set aside;

(2) the three (3) principal assets namely, the Building, the Ssangyong shares and rubber plantation be sold forthwith;

(3) the parties agree that the sale of the assets in Singapore, namely, the Building and the Ssangyong shares be conducted by reputable and qualified professionals in Singapore;

(4) in respect of the Ssangyong shares, if either or both parties wish, their proportionate percentage (ie 50%) of the Ssangyong shares may be deposited with their respective solicitors, without the same being sold;

(i) the parties' respective solicitors, save that they be entitled to register the same in their names or name of a nominee company, undertake not to sell or deal with the respective Ssangyong shares held with them, until time for distribution for the same or until further order;

(ii) the respective block of Ssangyong shares will only be distributed to the parties by their respective solicitors at the same time as the proceeds of sale of the remaining assets are distributed or until further order.

(5) there be liberty to apply.

3. On an application made by the Bajumis under the liberty to apply provision in item (5) above, the Court of Appeal (inter alia) made the following additional orders on 22 July 2002 (the Second Order of Court):-

(1) the dividends on the 8.7 million Ssangyong shares registered in the name of UOB Kay Hian Private Limited, acting as agents for the solicitors of the Bajumis, are to be paid to UOB Kay Hian Private Limited's Sub-account no. 2051-1707-2536 and dealt with as provided for in para 4(ii) of the first order;

(2) nothing in the first order, nor in this order, shall be taken to have determined what the area of the rubber plantation should have been under any prior contractual arrangements between the Tans and the Bajumis.

4. Before the Bajumis obtained the Second Order of Court, the plaintiffs commenced this suit (on 9 July 2002). I should point out that the application of the Bajumis was filed on 27 June 2002. In the statement of claim, the plaintiffs alleged that the first defendants had agreed to hold 8.7 million Ssangyong shares on trust. They further alleged that the first defendants had furnished written assurances and undertakings to the plaintiffs agreeing to hold the shares on trust. It was alleged that the plaintiffs had prepared and signed documents (which included a Form to the Central Depository Pte Ltd [CDP]) to the effect that the deposit of shares placed with the first defendants reflected such an arrangement. The plaintiffs had then handed the Form to the CDP on 16 April 2002. Between 16 and 18 April 2002, the plaintiffs discovered from the CDP that the Form was altered to reflect the first defendants as beneficial owners of the 8.7 million Ssangyong shares. Through the second defendants, the first defendants had taken the position they were entitled to the dividends on those Ssangyong shares and claimed on Ssangyong Cement accordingly in Suit No. S742 of 2002/H. On 29 July 2002, the Assistant Registrar ordered the second defendants to amend their statement of claim in Suit No. S742 of 2002/H to plead, the basis on which they claimed to become the registered owner of the 8.7 million Ssangyong shares and, the capacity in which they held those shares. On 11 October 2002, the Assistant Registrar ordered Ssangyong Cement to pay interest on the dividend ($508,950) declared on 8.7 million Ssangyong shares at 1.5% per annum, from the date of the writ (in Suit No. S742 of 2002/H) and that the dividend be paid into the second defendants' CDP sub-account as per the Second Order of Court.

5. In this suit, the plaintiffs claimed inter alia, a declaration that both defendants held the 8.7 million Ssangyong shares on trust for the plaintiffs who remained the beneficial owners and are beneficially entitled to all the rights thereon. A further declaration was sought that the altered Form was null and void and of no effect.

The application

6. On 1 August 2002, the first defendants applied vide summons-in chambers entered no. 2781 (the application) to strike out the plaintiffs' statement of claim against both defendants, pursuant to O 18 r 19(1)(a) or rule 19(1)(b) or rule 19(1)(d) of the Rules of Court, on the ground that the action herein discloses no reasonable cause of action, or is scandalous, frivolous or vexatious, and or is an abuse of the process of court.

7. An affidavit was filed by a partner (Randhir Ram Chandra [RRC]) of the first defendants in support of the application. RRC revealed that the Tans (who effectively control the plaintiffs) did not agree with the literal interpretation of the First Order of Court namely, that the parties' proportionate percentage (50%) of the Ssangyong shares may be deposited with their solicitors without the same being sold. The plaintiffs persuaded Ssangyong Cement to withhold payment from the second defendants of the dividend declared on the 8.7 million Ssangyong shares and pay it instead to the plaintiffs. It was for that reason that the Bajumis applied to the Court of Appeal and obtained the Second Order of Court. It was equally clear therefrom that the beneficial ownership of the 8.7 million Ssangyong shares was vested in the Bajumis. Consequently, RRC deposed, the plaintiffs' claim was untenable on a plain reading of both Orders of Court.

8. The plaintiffs countered the application by...